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Getting The Big Picture Right: Financial Advisors' Daily Digest

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By SA Gil Weinreich :

If you get the big picture right, it's okay if some of its details are a little fuzzy. That occurred to me in the context of Roger Nusbaum's latest article on Seeking Alpha on the active-passive debate. He had some good points on the topic, and I don't mean to minimize them. Wait - actually I do intend to minimize them, but so does he. "Active versus passive is not the point of this post, that's been written about 1,000 times," he writes.

Mainly, he discusses the approach of an investor named Douglas Callaghan whose investing tactics seem quite sensible: Invest for the long-term without market timing; invest globally; be contrarian; allocate to underperforming sectors. Though these tactics resonate with me, I'm going to minimize them too - in deference to a sentence Nusbaum includes en passant at the end of his discussion, to wit:

Ding. Ding. Ding. That's it. That's the big picture that too many lose sight of. I liked Douglas Callaghan's approach; others are attracted to any one of a number of other approaches. There's room for a wide variety of ways to invest - aggressively, conservatively and everything in between. But if you manage the three fundamentals Nusbaum cites, you can't go wrong.

The first and third are self-evident; the middle criterion - minimizing self-destructive behavior - is vaguer: To me that suggests excessive trading, though I recognize that trading may be part of one of those aforementioned strategies that work for some people and not for others. Perhaps then we can re-characterize that middle criterion as minimizing undisciplined behavior. Thus, if your strategy calls for active investment decisions, you can be considered non-self-destructive if you operate according to a clear set of rules rather than on the basis of impulses such as fear or greed.

So, that's the nub of it. Save early and often, implement a disciplined strategy that works for you, live within your means, and you're well on your way.

If you have any other big-picture formulations, please share them in our comments section. And here are today's advisor-related links:

See also Realty Income: Show Me The Money ... Later on seekingalpha.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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